PayThink
Fintech is health care and B-to-B's lifeline to relevancy

The payments space, which boasts one of the biggest growth markets in the world, fintech, is expected to grow substantially in the year ahead, and companies in several key industries need to keep track of to stay competitive.

Research estimates that global fintech solution usage is currently at 33% and is expected to increase to 52% in 2018.

B-to-B payments are further behind than that industry should be.

This is often attributed to the complex nature of B-to-B payments, most transactions involve multiple stakeholders, are usually attributed to budgets, and are managed manually. The check still holds as the most common method of payment acceptance in U.S. B-to-B payments, but only just. The Association for Financial Professionals has found that in 2004 81% of B-to-B organizations paid by check, but by 2016 this number had shrunk to 51%.

The U.S. government has already mandated that in 2018, all invoicing for business-to-government payments will be electronic only. This is bound to have a roll-on effect into the B-to-B market as a whole. In 2018, expect more CFOs to begin to realize the efficiency benefits of digitizing B-to-B payments.

Health care is another industry driving fintech investment. According to eHealth analysis of the Health care Marketplace during the 2017 open enrollment period, the average annual deductible was over $8,200 for a family plan, accounting for a 3% or $249 increase on the previous year.

Maximizing the chance of capturing patient payments means providing a friction-free payment process. Recent statistics show over 50% of patients prefer to be billed electronically. In fact, 79% of patients are happy to provide their email address for billing and correspondence, yet 90% of practices are still mailing paper-based statements. Health care providers will need to accommodate a broad variety of electronic options in 2018 or face missing out on crucial revenue.

The reality of the rising number of patients with high-deductible health plans or PPOs means more health care payments will fall into accounts receivables management (ARM). Much like providers themselves, health care ARM organizations need to be able collect payments online using all payment types, including the ability to accept health savings account (HSA) and financial savings account (FSA) payments.

The BillingTree annual ARM industry in 2017 found the number of ARM organizations processing payments from HSAs/FSAs had increased 10% from 2016. Expect this number to grow in the year ahead as patient, provider and accounts receivables adjust to the sharp rise in patient responsibility and shifting health care payment landscape.

Card brands and credit unions will also make major inroads in fintech. Currently, the costs for using a card to settle community fees and rent payments are higher than those consumers are used to when purchasing retail goods. In order to compete with debit account and ACH rates, costs for settling rent payments and community fees need to come down.

Already, certain card providers are creating new rate categories for apartment due payments and rentals. In 2018, this will open the door to the availability of more electronic payments options which offer convenient ways for tenants to settle rent and community fees, increasing revenue for property managers and customer service.

For credit unions, 2018 will carry a familiar challenge, which is staying competitive with the big banks. This means creating competitive offerings while delivering a personalized service to keep its members happy in the hope of luring them away from larger institutions.

When it comes to technology, the size of credit unions can actually become an advantage. Smaller business have smaller infrastructure, so adapting to integrate new technologies takes less time, meaning they can quickly accommodate the evolving needs of a tech-savvy membership base. In 2018, we will witness more credit unions turning to technology providers to help expand their payment solutions, a trend that was identified by respondents to a Q4 BillingTree survey on financial services technology adoption. The survey found 66% of respondents plan to adopt new payment technology in 2018, a steep rise from just 14% the year before.

The increasing adoption of virtual card payments by accounts payable departments has created an unex­pected complication for suppliers: more friction in the processing, posting and reconciliation of payments and receivables. The root of the problem is that most suppliers rely on a manual approach to processing e-mailed virtual card payments. Suppliers are forced to balance their organization’s need for operational efficiency and control with rising customer demand to pay with a virtual card. But a new breed of tech­nology enables suppliers to process virtual card payments straight-through, addressing the needs of buyers and suppliers. This paper details the growth of electronic business-to-business (B2B) payments, shows how manual approaches to processing virtual card payments cause friction in accounts receivables, describes a way to process virtual card payments straight-through, and highlights the benefits of friction­less payments.